Alert to Charities and Political Campaigns: Watch Out for CDG

Presidential campaigns raise tens and sometimes hundreds of millions of dollars from a vast pool of donors. Campaigns are supposed to vet contributors but the endless flow of checks makes that problematic, even if there is a plan in place for due diligence.

ABC Newsreported last month that three donors to Hillary Clinton’s presidential campaign had received last-minute pardons from her husband before he left office in 2001. The Clinton campaign suggested that the donors had slipped through the cracks. “We have raised over $65 million from over 200,000 people,” campaign manager Howard Wolfson told ABC. “I appreciate your bringing the instance of this $5,300 and these three people to our attention.”

Here’s a donor to Rudy Giuliani’s campaign that presumably slipped through the cracks: Brian Pasch of a New Jersey-based company called CDG Management.

Pasch gave Rudy $2,300 (the maximum allowed) back on June 4 of this year; his wife Denise gave the same amount. In making the donation Pasch identified himself as an executive at CDG (which is associated with firms known as Civic Development Group and Millennium Teleservices). These firms have an extensive public track record of shady telemarketing and have been widely accused of making false representations to consumers in fundraising appeals, and keeping much of the money it raised for the charities. And they appear to specialize in taking advantage of small charities created to assist police and firefighters.

I left a message for Pasch at his office at CDG and through an email to his personal website, which focuses on his love of the good life in general and wine in particular. CDG referred questions about the allegations of fraudulent fundraising to its public relations office. I emailed the office but never got a reply.

“We are reviewing the matter before making a decision,” Maria Comella, a spokeswoman for Giuliani’s campaign, said when I asked her about the contribution from Pasch.

Back in 1998, the Federal Trade Commission announced that it had reached a settlement with CDG, whose top officials include Scott Pasch (Brian’s brother) and David Keezer. The press release said, among other things, that the company had been “soliciting on behalf of a non-profit organization, the American Deputy Sheriff’s Association…. [CDG] misrepresented to consumers nationwide that contributions [would] buy bullet-proof vests, provide death benefits for deceased officers surviving family members, or otherwise benefit local law enforcement.” In fact, the FTC charged, virtually no money raised by CDG in the name of the Sheriff’s Association was used for the purposes stated.

CDG has been the subject of multiple state investigations and has been operating under a consent agreement with the FTC since the 1998 settlement. The company has been in so much trouble that an entire website is dedicated to tracking its behavior.

In 2001, Vermont Attorney General William Sorrell announced that his office had “settled a major charities fraud case..” The defendants were CDG and charities that CDG conducted fundraising campaigns for, including the “Cancer Fund of America” and “Paralyzed Veterans of America–New England.”

The statement says defendants acknowledged that CDG “told Vermont donors that Cancer Fund of America provided ‘urgent pain medication,’ to critically ill cancer victims, but the only medications bought with contributions “were over-the-counter products like ibuprofen.” The company also identified the Paralyzed Veterans group as having been among the “leading advocates for the disabled community in Vermont,” for 30 years, but in fact the group did almost no advocacy work in Vermont and “less than 2 percent of the $485,000 raised in Vermont went directly to benefit Vermont veterans.”

CDG also raised money for the Oregon Volunteer Firefighters Association. “In this year’s fundraising drive, OVFA raised $900,000 from generous Oregonians to aid volunteer firefighters who serve rural areas throughout the state,” said a 2004 story in Wilamette Week:

Thanks to a bum agreement with the telemarketing firm it hired to scare up the cash, though, OVFA only kept $95,740 of the proceeds–or about 11 percent of the take. The balance, around $800,000, went to the shady New Jersey-based call center Civic Development Group LLC, which raises money on behalf of police and firefighter groups around the nation. (It also shills in Oregon for the Cancer Fund of America, from which it takes 88 percent of donations.)

In September of this year, the FTC filed a complaint against CDG alleging that it was violating the consent agreement and once again making false statements to consumers during its charitable fundraising drives. The complaint specifically noted the firm’s extensive work for police and firefighter organizations.

“Donors are going to slip by, that’s just reality,” Naomi Seligman of Citizens for Responsibility and Ethics in Washington told me. “But based on what we know, Giuliani should return the contribution.”

Incidentally, CDG officials have made a few other donations in the past as well. In 2003, both Pasch brothers contributed to George W. Bush’s campaign and the following year all contributed to the Leadership PAC of New Hampshire Senator John Sununu.

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